According to the National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI), which gauges builder perceptions of current and future single-family home sales, homebuilder sentiment levels increased in October, as future sales expectations surpassed the 50 point breakeven mark for the first time in almost 10 months.
“The HMI gain in October is a positive signal for 2026 as our forecast is for single-family housing starts to gain ground next year,” said NAHB Chief Economist Robert Dietz. “The 30-year fixed-rate mortgage fell from just above 6.5% at the start of September to 6.3% in early October. Combined with anticipated further easing by the Fed, builders expect a slightly improving sales environment, albeit one in which persistent supply-side cost factors remain a challenge.”
Even amid market uncertainty and a government shutdown, confidence levels in the market for newly built single-family homes rose this month by five points since September, reaching 37.
All the HMI subindices posted a gain this month, with current sales conditions jumping four points to 38, future sales rising nine points to 54 and traffic of prospective buyers increased four points to 25.
“Based on modeling of historical data, the October increase for the HMI suggests an approximate 3% increase for the September single-family permit data on a seasonally adjusted annual rate basis,” continued Dietz. “Our model suggests a 2% to 4% range for the increase based on the statistical relationship.”
The HMI survey also revealed that 38% of homebuilders reported cutting prices this month, not much of a change from previous months. The average price reduction rose to 6%, only one percentage point higher than earlier this year.
Regionally, the three-month moving average HMI rose the most in the Northeast by two points to 46, followed by the South increasing by two points to 31 and the West by two points to 28. The Midwest remained unchanged at 42.
Although national and regional indicators show gradual improvement, affordability pressures and buyer hesitancy continue to slow the market’s recovery.
“While recent declines for mortgage rates are an encouraging sign for affordability conditions, the market remains challenging,” said NAHB Chairman Buddy Hughes. “The housing market has some areas with firm demand, including smaller builders shifting to remodeling and ongoing solid conditions for the luxury market. However, most homebuyers are still on the sidelines, waiting for mortgage rates to move lower.”
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